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Your idea: XAUUSD Trading Strategy: 9 EMA Deviation and Breakout Strategy Risk-t…
💡 Described strategy
Analysed 19 Oct 2026, 10:13 PM IST
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Heads up: this strategy was originally created for
the forex market.
We applied the exact same logic to Indian stocks & indices and the backtest completed successfully —
every result below is on Indian market data.
Why 3.0/5? (stars grade the EDGE — per-trade expectancy, consistency, drawdown — not the headline return)
- ✓ A real but modest per-trade edge: +0.19R across 19,068 trades
- ✕ Only 35% of trades win — the rare big winners must keep showing up
- ✕ 5 of 9 tested years were negative (2018, 2019, 2024, 2025) — the edge is regime-dependent
- ✕ Max drawdown -23% on the ₹2L portfolio — the compounded return came with deep pain along the way
- ✕ Most of the big total return is compounding in a rising market (beta) — the per-trade edge above is what would survive a different regime
Detected components (auto-read from transcript)
Claims it makes (quotes pulled from the transcript)
- “Formula: 50% Level = (Setup Candle High + Setup Candle Low) / 2 Step 5: Take Profit (TP) - Set the take-profit target at a 1:3 risk-to-reward ratio.”
- “Formula: 50% Level = (Setup Candle High + Setup Candle Low) / 2 Step 5: Take Profit (TP) - Set the take-profit target at a 1:3 risk-to-reward ratio.”
Verdict
Auto-backtested. AI-decoded: EMA-filtered breakout strategy on XAUUSD: price deviates from 9 EMA, closes back across it (confirmation), then breaks the setup candle's high/low with 1:3 RRR. Ran on 159 large/mid-caps, real costs. 19,068 trades, win 35%, payoff 2.51, expectancy +0.19R/trade (avg +0.89%/trade).
This is a real edge. The payoff is convex (winners run well past the average loser). Regime-dependent — positive in only 44% of years.
Mechanically decoded from the transcript and scored from the metrics. Flagged for human review; a hand-vetted verdict can override it.
🔴 Live forward test (no hindsight — only trades the rules fired AFTER we published this verdict)
Tracking since 2026-10-20 — no qualifying signals have fired yet. The engine re-checks every night on fresh data; results appear here the day the rules trigger.
Is it profitable? (green above the line = made money, red below = lost it)
₹2,00,000 portfolio (max 5 positions, across the stock universe — real delivery costs)
Return+210.0%
CAGR+15.4%
Max drawdown-23.2%
Trades451 · 168 won
₹200,000 → ₹619,983
· 2018-07-09 → 2026-06-08
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 |
|---|---|---|---|---|---|---|---|---|
| +8% | +22% | +85% | +13% | -0% | +12% | +0% | +0% | -0% |
Simulated on the 159 large/mid-cap universe. Capital-constrained, daily mark-to-market.
Year by year (every trade the rules fired, across the tested stocks)
| Year | Trades | Win % | Expectancy | Avg return / trade |
|---|---|---|---|---|
| 2018 | 971 | 27% | -0.31R | -2.08% |
| 2019 | 1972 | 33% | -0.03R | -0.31% |
| 2020 | 2418 | 45% | +0.57R | +4.33% |
| 2021 | 2526 | 37% | +0.33R | +1.69% |
| 2022 | 2411 | 32% | +0.02R | -0.15% |
| 2023 | 2826 | 44% | +0.84R | +3.44% |
| 2024 | 2556 | 29% | -0.02R | -0.47% |
| 2025 | 2330 | 30% | -0.11R | -0.81% |
| 2026 | 1058 | 25% | -0.28R | -1.39% |
Where this strategy made & lost money (the full stock-by-stock breakdown — 158 stocks, incl. 2026)
| # | Stock | Trades | Win% | Avg/trade | Best | Total | 2026 |
|---|---|---|---|---|---|---|---|
| 1 | ████████ | 127 | 52% | +13.8% | +124% | +1758% | +199% |
| 2 | ████████ | 113 | 50% | +17.3% | +182% | +1950% | +186% |
| 3 | ████████ | 100 | 28% | +0.7% | +44% | +68% | +140% |
| 4 | ████████ | 99 | 44% | +6.6% | +85% | +649% | +121% |
| 5 | ████████ | 126 | 45% | +4.2% | +59% | +533% | +76% |
| 6 | ████████ | 110 | 33% | +3.3% | +101% | +361% | +69% |
| 7 | ████████ | 68 | 41% | +4.3% | +70% | +289% | +58% |
| 8 | ADANIPORTS free peek | 130 | 36% | +0.8% | +42% | +100% | +50% |
| 9 | ████████ | 123 | 35% | -0.2% | +59% | -27% | +45% |
| 10 | ████████ | 43 | 26% | -2.5% | +17% | -107% | +39% |
| 11 | ████████ | 115 | 43% | +7.4% | +132% | +845% | +32% |
| 12 | ████████ | 119 | 34% | -0.5% | +16% | -64% | +28% |
| 13 | ████████ | 119 | 39% | +1.8% | +52% | +214% | +25% |
| 14 | ████████ | 134 | 39% | +0.4% | +27% | +58% | +25% |
| 15 | ████████ | 142 | 43% | +3.4% | +49% | +481% | +24% |
| 16 | ████████ | 131 | 36% | +1.6% | +71% | +209% | +15% |
| 17 | ████████ | 146 | 37% | +0.8% | +32% | +117% | +15% |
| 18 | ████████ | 131 | 33% | +0.5% | +45% | +70% | +15% |
| 19 | ████████ | 129 | 40% | +0.1% | +41% | +18% | +15% |
| 20 | ████████ | 131 | 29% | -1.5% | +33% | -192% | +14% |
| 21 | ████████ | 109 | 28% | -1.2% | +36% | -126% | -43% |
| 22 | ████████ | 135 | 24% | -1.5% | +25% | -201% | -41% |
| 23 | ████████ | 132 | 29% | +0.1% | +52% | +17% | -40% |
| 24 | ████████ | 129 | 29% | -0.5% | +42% | -67% | -39% |
| 25 | ████████ | 148 | 29% | +0.3% | +84% | +48% | -39% |
| 26 | ████████ | 130 | 33% | +0.4% | +42% | +52% | -39% |
| 27 | ████████ | 131 | 33% | +0.9% | +58% | +113% | -39% |
| 28 | ████████ | 127 | 39% | +1.1% | +51% | +143% | -39% |
| 29 | ████████ | 126 | 32% | +1.4% | +106% | +176% | -39% |
| 30 | ████████ | 150 | 44% | +2.6% | +51% | +389% | -39% |
You can see the numbers — see the names.
Unlock every stock in this breakdown and download it as Excel.
The worst stock in this table returned -201% under these
exact rules — one wrong pick costs many times the unlock.
Educational backtest output only — not investment advice or a recommendation to buy/sell any security. AI-generated from stored historical data; not 100% accurate. Past performance is not indicative of future results.
On the index (same rules applied to NIFTY & BANKNIFTY)
| Index | Trades | Win% | Expectancy (R/trade) | Avg return/trade |
|---|---|---|---|---|
| NIFTY | 235 | 34% | +0.09R | -0.11% |
| BANKNIFTY | 207 | 35% | +0.17R | +0.34% |
Full transcript (482 words)
XAUUSD Trading Strategy: 9 EMA Deviation and Breakout Strategy
Risk-to-Reward Ratio (RRR): 1:3
1. Buy Setup (Long Entry)
Step 1: Candle Moves Away from the 9 EMA
- The price must move significantly away from the 9 EMA.
- Look for a strong bullish or bearish price movement that creates a noticeable distance between the candle and the 9 EMA.
Step 2: Candle Closes Above the 9 EMA
- After moving away from the 9 EMA, wait for a candle to close above the 9 EMA.
- The candle that closes above the 9 EMA becomes the Buy Setup Candle.
Step 3: Buy Entry
- Mark the high of the Buy Setup Candle.
- Enter a BUY trade when the price breaks above the high of the setup candle.
- The entry is triggered only when the price breaks the setup candle's high.
Step 4: Stop Loss (SL)
- Calculate the 50% level of the Buy Setup Candle's range.
- Place the stop loss at the 50% level of the setup candle.
Formula:
50% Level = (Setup Candle High + Setup Candle Low) / 2
Step 5: Take Profit (TP)
- Set the take-profit target at a 1:3 risk-to-reward ratio.
- For every 1 unit of risk, aim for 3 units of profit.
2. Sell Setup (Short Entry)
Step 1: Candle Moves Away from the 9 EMA
- The price must move significantly away from the 9 EMA.
- Look for a strong bullish or bearish price movement that creates a noticeable distance between the candle and the 9 EMA.
Step 2: Candle Closes Below the 9 EMA
- After moving away from the 9 EMA, wait for a candle to close below the 9 EMA.
- The candle that closes below the 9 EMA becomes the Sell Setup Candle.
Step 3: Sell Entry
- Mark the low of the Sell Setup Candle.
- Enter a SELL trade when the price breaks below the low of the setup candle.
- The entry is triggered only when the price breaks the setup candle's low.
Step 4: Stop Loss (SL)
- Calculate the 50% level of the Sell Setup Candle's range.
- Place the stop loss at the 50% level of the setup candle.
Formula:
50% Level = (Setup Candle High + Setup Candle Low) / 2
Step 5: Take Profit (TP)
- Set the take-profit target at a 1:3 risk-to-reward ratio.
- For every 1 unit of risk, aim for 3 units of profit.
3. Strategy Rules Summary
Rule BUY Setup SELL Setup
Indicator 9 EMA 9 EMA
Initial condition Price moves away from 9 EMA Price moves away from 9 EMA
Confirmation Candle closes above 9 EMA Candle closes below 9 EMA
Entry trigger Break of setup candle's high Break of setup candle's low
Stop loss 50% level of setup candle 50% level of setup candle
Take profit 1:3 risk-to-reward 1:3 risk-to-reward
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